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Kevin Wale Remarks Creating a Home Away from Home Automotive News Europe Congress June 21, 2006 Slide 1 Good afternoon, ladies and gentlemen. I want to thank Automotive News Europe for the opportunity to be a member of this panel. The theme of this year’s conference is “Winning at Home and Away.” I’d like to suggest that it is not, in fact, about winning at home and away. It’s about winning by creating a home away from home. This more accurately reflects GM’s thinking and practices. In today’s increasingly globalized world, “away” becomes a relative term. “Home” from a corporate mindset standpoint can and should be anywhere. In fact, the more inconsequential the geographical location of your corporate headquarters, the more global you truly are. At GM, it’s more than a mindset. Our "home” is wherever we lay our hat … and for our company, that’s in nearly two hundred countries around the world. Slide 2 We’re establishing centers of expertise outside the Detroit area. An example is our product design and development programs. Home for our global small car and mini-car program is Korea. Home for our global rear- wheel-drive program is Australia. And home for our global intermediate car is Germany. Another way we make our local operations a home away from home is by adapting the best practices and processes GM has to offer, not just from Detroit but from around the world. I’ll talk more about this later. Finally, we make our local operations feel like a home away from home by customizing and integrating them into the local landscape, by thinking locally – by managing with locals, by reflecting local customs and market requirements. Today, I wanted to spend just a few minutes talking about one of GM’s newest and most important “homes away from home”: China. I’ll review some of our expectations for the future in China. I’ll also mention some of our greatest challenges. But first I wanted to spend a few seconds looking at the country that is now my home. As Mike Dunne has explained, China’s transformation is nothing short of phenomenal. Economists say that in relatively short order, perhaps as 1 soon as 2025 and no later than 2050, China will displace the United States as the world’s largest market. In just the last five years, we in the automotive industry have seen China pass first Germany, and just last year, Japan, to become the second- largest vehicle market in the world. Early on, GM recognized the potential of China, and I think courageously moved to develop and execute a comprehensive China strategy. But even our early bullishness was grossly underestimated and sometimes criticized. Slide 3 This chart shows how the growth of China’s vehicle market has surpassed our projections. In 1998, we were projecting sales of about 3.3 million vehicles in 2005. In reality, more than 5.9 million units were sold. We missed by only 80 percent or so. Lesson One: If you’re going to miss by this much, it’s good to miss on the positive side. Lesson Two: What is the value of forecasts? But we were not the only ones to miss. Even the most optimistic projections failed to comprehend the rising demand for personal cars that would accompany China’s explosive economic growth and the rise of a middle class. In fact, today’s middle class has been estimated by some to number about 150 million people – or half the total population of the United States. In 2005, vehicle sales grew 13.2 percent, led by growth in car sales of 24.3 percent. For the first time ever, sales of passenger cars surpassed sales of trucks. We anticipate steady vehicle sales growth in China of greater than 10 percent through the end of the decade and slightly slower but ongoing growth through 2015. It shouldn’t come as a surprise, then, that China is expected to be the world’s highest-growth vehicle market through the next decade, by a large measure. In fact, its growth will likely be more than three times that of the number two market, the United States. So China’s not a bad place to build another home away from home. But it isn’t easy. China is no longer one of the world’s best kept secrets. There’s plenty of competition and there’s plenty that can go wrong. 2 So how do you create this home so that it will weather the storms and stand the test of time? Slide 4 We believe that building a major presence and becoming a major industry player requires finding the proper balance between using a company’s global resources and capabilities on the one hand and working with its Chinese partners and Chinese operations to meet the needs of the local market on the other. It involves finding approaches that are not purely regional or global. It’s finding solutions that share the best characteristics of both. I think GM has done a good job getting this balance between global and local right in China. Slide 5 Take our product and brand portfolio. Just like in the United States, GM’s brand portfolio in China has evolved with the market and with the needs of consumers. From basically a single brand called Buick, we have expanded our portfolio to meet the evolving market needs. Today we have six brands in China, ranging from the Wuling mini-vehicle nameplate all the way up to the Cadillac luxury brand. Slide 6 Since our first Buick sedan rolled off the production line at our Shanghai GM joint venture in December 1998, we have continually added to our domestic lineup with new and upgraded models extensively tailored to the local market by the Pan Asia Technical Automotive Center – or PATAC, our engineering and design center in Shanghai. Our domestic lineup is supplemented with imports from GM’s operations around the world. Today, we offer about 29 different products in China. Our products are sold through a comprehensive but still-growing dealer network that now numbers about 1,000 outlets. I’m often asked by the media, What is GM doing right in China to make it so successful that it isn’t doing in other parts of the world? My response is straightforward and simple. Slide 7 GM is successful in China not because we’re doing things differently from other parts of the world. In fact, it’s just the opposite. 3 We are successful because we are leveraging what we have learned from other parts of the world. We are successful because we have taken advantage of years of knowledge and experience from our operations in the North America, Europe and throughout Asia Pacific. Leveraging the best GM has to offer from around the world has not only made us a stronger competitor, it has also played a major role in the maturing of China’s automotive industry. Slide 8 Another key to our making China a good home away from home is having the right partner. With SAIC, we feel that we have the strongest partnership in China’s automotive industry with SAIC and that by taking advantage of their knowledge and expertise, we’ve been able to capitalize on the country’s tremendous potential. Slide 9 This marriage with SAIC has over the last nine years spawned numerous offspring, seven to be exact. Our seven joint ventures cover everything from vehicle and powertrain manufacturing to automotive engineering and design to automotive financing. Having a good partner like SAIC is critical in the automotive industry. Even if we weren’t required by regulation to have a local partner, GM would still favor this approach toward investment in China. In addition to providing great local resources, working with SAIC also has given GM invaluable insight into what local consumers are looking for in a vehicle. These insights allow us to effectively transform our global resources into true competitive advantages in China. Our partnerships in China are unique. There’s nothing like them anywhere else in the world. Both SAIC and Wuling Motors are affiliated with their respective municipal governments. They have their own sets of priorities and are often driven by government policy, such as the demand for the development of self-owned brands and the development of clean energy vehicles. They are impacted by language and cultural differences. Thus, the need for sensitivity, for continual engagement and the ongoing nurturing of our individual relationships and resulting partnerships. Indeed, our relationships continue to evolve. That is why a careful balance is needed to ensure both sides win. And again, the only way to assure that is through open communication and frequent contact at all levels. Slide 10 4 In the space of less than a decade, China has gone from a faint blip on the GM radar screen to GM’s number two global market, bypassing traditional GM strongholds like Canada and the U.K. But as great as it is today, China’s importance to GM’s is just beginning to be felt. In fact, I suggest that any projections as to its impact will be just as far off as our early projections on growth. As I said earlier, we expect China to remain the world’s fastest-growing market and a highly competitive market – a market with a growing number of global participants as well as a handful of strong local players. That is why we have not slowed down in our efforts to build another home away from home.

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